Transcript Title

Grassland usage under a
reduced policy budget:
FARMIS
to Switzerland
What areapplied
differences
between
Switzerland and Wales?
Judith Hecht, FiBL, Switzerland
Simon Moakes, AU-IBERS, Wales
Content
• Objectives of MultiSward
• FARMIS the model
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Characteristics
Can be used to analyse impacts...
Data and Sampling
Input/Output coefficients
Calibration: The basis year
The Baseline
The Scenario
The Results
• FARMIS an example
– Policy scenarios
– Results
– Summary and Outlook
http://www.multisward.eu
Objectives of MultiSward
• Defining roles of grassland at different levels in
terms of economic, agronomic and evironmental
perspectives
• Objectives Task 5.3: Evaluation of scenarios by
modelling the socio-economic and environmental
impacts.
• To analyse the impact
• of a) general CAP changes, b) specific policies, c)
innovative policy options and d) technological
innovations
• on a) the viability and persistence of grassland-based
systems, b) their output production and c) the quality
of the environment.
• in a) Switzerland, b) Germany and c) Wales
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FARMIS: Characteristics
• Farm groups are
flexible and based on
a) farming system, b)
region, c) size, d) farm
type (arable, mixed,
animal)
• Farmers maximise
income subject to
several constraints
(for instance land)
• Farmers choose
levels of 29 plant
production and 15
animal production
activities
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Comparative
static, and sector
consistent farm
group model for
the German and
Swiss
agricultural
sector
FARMIS: Can be used to analyse
impacts…
• that cause a change of the relative profitability
• that are initiated by changes in agricultural policies
• that commence an adaptation of the behaviour of
farmers
• that occur on different levels
http://www.multisward.eu
FARMIS: Data and sampling
real world
model world
approx. 60’000
farms
farm specific
aggregation factors
2075 FADN
farms
30 Farm groups
Data preparation and processing
1.
2.
3.
4.
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Selection of identical farms for two consecutive years
Calculation of improved aggregation factors
Grouping of single farm data
Generation of consistent model coefficients
FARMIS: Input/Output coefficients
activity dairy cow
Inputs
Outputs
forage
milk
labour
manure
etc., …
beef
CH4
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etc., …
FARMIS Calibration: The Basis year
Dairy
cow
Max! 1500*Xdairy_cow + 250*Xfattening_bull
Subject to the following logical constraints:
100
112*Xdairy_cow + 12*Xfattening_bull
30*Xdairy_cow + 15*Xfattening_bull
Forage
50/100
Xdairy_cow, Xfattening_bull
<= 2800 h
<= 1500 GJ ME
>= 0
50
Optimal solution LP:
18 dairy cows + 64 fattening bulls
Empirically observed:
9 dairy cows + 64 fattening bulls
25
Labour
25/233
Due to
hidden
costs of
dairy cow
production
Fattening bull
100
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200
FARMIS: The Baseline
determines numbers of dairy cows for dairy cow
farms considering hidden costs and future
developments of coefficients
FARMIS
in order to maximise income
subjected to
a) ∑Xi ≤ b1, total land constraint
b) Xi ≥ 0, non-negativity constraint
c) X1 ≤ b2, calibration constraint
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aggregates
sector consistent
results
FARMIS: The Scenario
determines numbers of dairy cows for dairy cow
farms considering hidden costs, future developments
of coefficients and assumptions according to
future political conditions
FARMIS
in order to maximise income
subjected to
a) ∑Xi ≤ b1, total land constraint
b) Xi ≥ 0, non-negativity constraint
c) X1 ≤ b2, calibration constraint
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aggregates
sector consistent
results
FARMIS: The Results
Basis year 2007
e.g. parameter
amount of milk
produced in year
2007 (eventually
regional
differentiated)
Environmental indicators
Economic parameters
Production quantities
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Baseline and
Scenario 2020
Policy scenarios
Basis Year
2006/ 2007
Baseline
2020
Scenarios for
2020
Scenario1 Scenario2 Scenario3
Budget
level
100%
Budget
distribution
Payment
system in
the basis
year
(2006/2007)
Development of
coefficients
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100%
100%
85%
85%
(homogenous
reduction between
programs)
(reduce payments
related to arable
land increase
payments related to
extensive
grassland usage)
Payment
New
system equal payment
to basis year system
(2006/2007)
New
Payment
system
New
Payment
system
Prices,
Prices,
technical
technical
progress etc. progress
etc.
Prices,
technical
progress
etc.
Prices,
technical
progress
etc.
Results
Scenarios for
2020
Scenario1
Scenario2 as
share of
Scenario1
Scenario3 as
share of
Scenario1
Production of milk
1
0.99
0.98
Production of beef
1
0.99
0.98
Area of arable land
1
0.98
0.91
Intensive
1
0.99
0.93
Extensive
1
0.95
1.09
Family farm income
1
0.79
1.14
Total expenditure
1
0.85
0.85
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Summary and Outlook
Switzerland:
• A reduction of the total budget of direct payments (-15%) is
• slightly reducing production (about 1%)
• slightly reducing intensive used grassland area (1%)
• reducing extensive used grassland area (5%)
• A reduction in the total budget of direct payments (-15%) +
an “extensive grassland-favourable” distribution of the
payments is
• slightly reducing production (about 2%)
• reducing intensive used grassland area (7%)
• increasing extensive used grassland area (9%).
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Summary and Outlook
Wales:
• Up-coming CAP-change is the move from historically based
SFP to area based SFP (decoupled since 2003)
• Likely transfer of budget from lowland to LFA farms.
• May cause loss of lowland grassland.
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Thank you
Grassland usage under a reduced policy budget:
FARMIS applied to Switzerland
by
Judith Hecht and Simon Moakes
Further information MultiSward go to:
http://www.multisward.eu/
Further information FARMIS go to:
http://www.google.de and type: farmis vti
http://www.vti.bund.de
http://www.multisward.eu
http://www.multisward.eu
Change in the Direct Payment (DP)
System of Switzerland
Payment
category
For activity
Unit
Basis year +
Baseline: Old DPS
Scenario:
New DPS
Payments for
arable land
Cereals, Maize
Other arable crops
Sugar beat
Fruits
Vegetables
CHF / ha
CHF / ha
0
1000
800
800
reduce
CHF / ha
CHF / ha
CHF / ha
CHF / ha
1900
0
0
450-1500
0
1800
1800
2000-3000
increase
CHF / ha
1900 - 2500
500
Payments for
biodiversity
Payments for
animals
Payments for
the protection
of resources
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…
Extensive meadow
Less intensive
meadow
Extenso production
CHF / ha 400
800
RGVE
CHF /
450 - 690
0
RGVE
Not activity specific CHF /
0
5000
(farm)
farm
Change of relative profitability between production activities
eliminate
add
Characteristics of FARMIS
•
•
•
•
Sector consistent farm group model
Farmers maximise income
Calibration for basis year 2006/ 2007
To analyse impacts
• that cause a change of the relative profitability
between production activities/ farm groups/ regions
• that are initiated by changes in agricultural policies/
technical or economic conditions
• that commence an adaptation of the behaviour of
farmers
• that occur on different levels
http://www.multisward.eu
Processes
Data
FADN-Farm
Other statistics
Accounts
Data processing
Generation of representative farm groups
Basis year
Calculation of
input/ output
coefficients
Target year
Forward projection of
coefficients/
parameters
Optimisation
Farm model
Calibration
PQP-Term
Scenarios
Results
http://www.multisward.eu
Solution:
Basis year
Solution:
Reference
Solution:
Scenarios
Steps of development
Year
Author
96-98 Jacobs
97-99 Schleef
Project
Establishment of FARMIS for the
German agricultural sector (based on
Excel)
Analysis of policies for N-reductions
(based on Excel)
2001 Bertelsmeier, Further development of FARMIS; main
...
Offermann module transferred to GAMS, MTR;
reform of the milk sector
2004 Gocht,
Expansion of EU-level (EU-FARMIS),
...
Hüttel,
transferring complete module to
Küpker,
GAMS; analysing reforms of the CAP
Offermann
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Steps of development
Year
Author
Project
2005 Hüttel,
...
Küpker,
Kleinhanß,
Offermann
Expansion and usage for different EUprojects (EDIM, GENEDEC; EUCEEOFP)
2007 Sanders
…
Development of FARMIS for Switzerland
(CH-FARMIS): Impact of liberalisation
on organic and non-organic farms
Conception of environmental indicators
(CH-FARMIS): Cost-effectiveness of
organic farming for achieving
environmental policy targets in
Switzerland
2010 Schader
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Concrete research questions
 Economic impact of agricultural liberalisation policies on
organic farming in Switzerland (Sanders, 2007)
 Direct payment concept of the «Vision Landwirtschaft».
Impacts on agriculture in Switzerland. Internal project report
(Sanders, Rudmann, Hecht, 2010).
 Which farmers are benefiting from liberalisation policies?
 Which farmers are benefiting from a change in the direct
payment system?
 Which policy instruments/ technical innovations are
efficient for maintaining grassland based production
systems?
http://www.multisward.eu
Calibration of FARMIS
Positive Mathematical Programming (PMP):
– Switch from normative LP, to a positive model, Paris and
Howitt (1995)
– Assumption: the empirically measured allocation of
resources on farms is micro-economically optimal
(Difference between LP and empirical solution = hidden
costs)
Main advantages compared to Linear Programming:
– No overspecialisation of the farms
– Smooth and flexible reactions of the farms
More realistic and plausible results in regional- and sector models
http://www.multisward.eu
5. Calibrate FARMIS
Switch from normative Linear Programming (LP) to Positive
Mathematical Programming (PMP), Paris and Howitt (1995):
• Assumption: the empirically measured allocation of resources
on farms is micro-economically optimal
• Difference between LP and empirical solution = hidden costs
Main advantages compared to LP:
• No corner solutions (overspecialisation of the farms)
• Smooth and flexible reactions of the farms
Consequences of PMP:
More realistic and plausible results on sector level
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Suggested technical implementation
and expected results of scenario 1
Scenario 1: Moderate (extreme or low) reduction of
the total CAP budget
Suggested technical implementation:
A distribution of the reduced budget is not known.
Therefore, the budget for each measure will be reduced
via a homogenous % flat-rate.
Expected results:
no impacts on the relative profitability
impacts on farm income
Solution:
DG-Agri has a proposal on the new distribution of
budget between measures (eliminated/ new measures)
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Change of grassland usage based
on a change in DPS of CH
Grassland intensity levels of CH
Different
scenarios
Old DPS
New DPS
Different farm groups of CH
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What can you do with FARMIS?
Analyse impacts
that cause a change of the relative profitability between
production activities/ farm groups/ regions
that are initiated by changes in agricultural policies/
technical or economic conditions
e.g. changes in supply based policy instruments (direct
payments, taxes on inputs, new policy measures, etc.)
e.g. changes in input and output coefficients
that commence an adaptation of the behaviour of farmers
in terms of their resource allocation (leading to another
production output, farm structure and even to changed impact
on environmental indicators)
that occur on different levels
the farm level (dairy cow farms, arable farms, etc.)
the regional level (valley, hill, mountain)
the sector level
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